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Income Tax
Generali
Posts: 36,411 Forumite
Perhaps it's just a lazy stereotype to state that the Tories just help out the rich.
http://www.ft.com/cms/s/0/969a605e-3616-11e0-9b3b-00144feabdc0.html#axzz1DjFFmrSi
(subscription required)
http://www.ft.com/cms/s/0/969a605e-3616-11e0-9b3b-00144feabdc0.html#axzz1DjFFmrSi
(subscription required)
Under 1 per cent of taxpayers are expected to pay a quarter of all income tax this year, according to official projections.The importance of this group of about 275,000 people – three times the number that can fit into Wembley stadium – who will pay the new 50p tax rate is a measure of Britain’s highly skewed income distribution and progressive tax structure.
Further up the scale, 13,000 people earning more than £1m a year are expected to pay an average of £1m each, accounting for 7 per cent of the total bill, figures published by HM Revenue & Customs show.
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Comments
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Well it's always been the case that without the richest few, we'd be substantially worse off. I like the example here:
http://blogs.telegraph.co.uk/news/danielhannan/100022697/why-tax-cuts-are-bound-to-favour-the-rich/
I think the core problem is the view of the rich as undeserving - people don't believe Britain is a meritocracy. Coming from a working class background, I had a chance to go to Cambridge, but aged 18, just thought people like me didn't go there, so I didn't even apply. I did apply to Imperial and got an offer, but I thought the same there also, so I didn't pick it. I've done OK anyway, but if I'd believed it was a meritocracy when I was 18, who knows where I might be.
Income tax is the more progressive of the payslip taxes though. I pay 6x as much income tax as someone on average wage, but only 2.5x the national insurance, averaging out to 4x the tax from my payslip. For higher earners, it is even more stark, since they'll pay a negligible amount of MI relative to earnings.0 -
Perhaps it's just a lazy stereotype to state that the Tories just help out the rich.
http://www.ft.com/cms/s/0/969a605e-3616-11e0-9b3b-00144feabdc0.html#axzz1DjFFmrSi
(subscription required)
I don't think 98% tax to 40% tax was illusory
'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I don't think 98% tax to 40% tax was illusory
When top marginal tax rates were 98%, pretty much nobody paid them.
IIRC, the top marginal tax rate under Labour on 'unearned income' was 168%. It was certainly above 100%. That is that if you earn more than a certain amount in interest, the Government would take all the interest plus some capital.
It was Lawson cutting tax rates that dramatically increased the proportion of income tax paid by the rich.
This Government is continuing the trend by removing welfare for the rich (eg no more child benefit for the top 15% of earners, no more child tax credit or whatever it's called for the top 10%).0 -
When top marginal tax rates were 98%, pretty much nobody paid them.
IIRC, the top marginal tax rate under Labour on 'unearned income' was 168%. It was certainly above 100%. That is that if you earn more than a certain amount in interest, the Government would take all the interest plus some capital.
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How was that made up? I thought the top rate was 83%+15% = 98%.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
I've always liked the idea of manditory tax then in the pound over a threshold.
Ie everyone pays £300 a year then 25p in the pound over 10k, then 35 over 40k etc etc.
Everyone then contributes.0 -
Council tax is a big chunk. When I live alone, it can be close to 10% of my takehome in a studio.0
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Well anyone who is working, and earning a half decent salary has every right to complain about tax, but perhaps not as much as a 'poor pensioner' like me!
If I write down my 'income', it consists of a couple of pensions, that add together to be [what might be termed] a 'decent amount'. So if my next door neighbour was working, and bringing in the same money, then at first thoughts, you would think he and I paid the same tax.
But in actual fact my 'decent' pensions only cover less than half my spending. The other half comes, of course, from savings. Hence, I am paying more than twice the VAT of my 'equivalent' neighbour, in addition to the 'same' tax on income and interest. My tax bill as a percentage of income is therefore probably 5%/10% or so higher.
I think us early retirees should be able to get 'tax' tax credit! A free bus pass and heating allowance is not good enough!
[Edit: OK, I know you will all be shedding tears and wonder where you can send me your charitable contributions. But I should point out that most of the extra spending is, of course, covered by tax free investment growth on ISA's etc., but obviously I'm spending my 'taxable' savings before the tax sheltered stuff!]0 -
When top marginal tax rates were 98%, pretty much nobody paid them.
IIRC, the top marginal tax rate under Labour on 'unearned income' was 168%. It was certainly above 100%. That is that if you earn more than a certain amount in interest, the Government would take all the interest plus some capital.
It was Lawson cutting tax rates that dramatically increased the proportion of income tax paid by the rich.
This Government is continuing the trend by removing welfare for the rich (eg no more child benefit for the top 15% of earners, no more child tax credit or whatever it's called for the top 10%).
All the historic tax tables are still available.
Do you actually have any evidence that marginal rates were higher than 100% ?
It sounds a bit like a urban tory myth to me (like so much of the early 1970's)
AFAIK top rate on income was 83% with a 15% surcharge on unearned income.
It always strikes me as a little strange that people forget that under the Tories between 1970 & 74, the top rate of income tax was 75% and that Anthony Barber increased corporation tax to 52% in 1973 !
(even the Guardian archive claims that Dennis Healey increased corporation tax to 52% when in fact it was done from April 1973).
Or that it was Edward Heath that increased employers national insurance premiums in 1973 - or that the rate of employee national insurance was 6.5% before 1979 and has marched up ever since (most of the increase under Tory administrations).
The top 10% of taxpayers paid 35% of all income tax pre Thatcher (source IFS) - by 1986/7 this had increased to 39%, it then increases to 42% in 1991 and on to 51% by 2001 (note how the biggest increase in share occurs well after the main top tax rate changes).
This is much as function of the changes in income distribution as anything else (ie the rich have taken progressively more of the cake no matter who has been in power).0 -
Do you actually have any evidence that marginal rates were higher than 100% ?
Of course I do (link), from HMRC.
In 1947-48 Atlee* (Lab) was PM. In 1967-8 Wilson (Lab) was PM. Both presided over Governments that confiscated wealth or at least tried to.- For 1947-48 a special contribution was payable when a person’s total income exceeded £2,000. For investment income over £5,000 it was 50%. So with income tax at 45% and surtax at 52.5%, the effective rate was 147.5%.
- In 1967-68, the special charge was imposed. For investment income over £8,000, the rate was 45% which - with income tax at 41.25% and surtax at 50% - meant a total rate of 136.25%.
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